Monday, August 25, 2014

German economy is losing momentum in the summer – Reuters Germany

Berlin (Reuters) -. Bearing the economic pessimists in the German economy wins because of the crises in Ukraine and the Middle East increasingly feed

The mood in the head of the company became cloudy days in August already the fourth month in a row. It is now no longer as bad as for over a year. The Ifo business climate index unexpectedly fell sharply by 1.7 points to 106.3, the Munich-based Ifo Institute told his survey of 7000 managers on Monday. “The German economy continues to lose power,” Ifo President Hans-Werner Sinn.

After the economic downturn in the spring – as the gross domestic product unexpectedly shrank – thus diminish the chances of a recovery in the second half. “We go for the third quarter of a growth close to zero,” said Ifo expert Klaus Rabe well. His institute would the previous growth forecast for 2014 of 2.0 percent, “clearly correct in the direction of 1.5 percent.” But probably Rabe also warns against pessimism: “From a recession, we are still far away.” The federal government currently sees no reason to depart from its forecast of 1.8 percent. If nothing dramatic passing, the growth rate will be good in 2014, said German Chancellor Angela Merkel in Spain.

“GOOD MOOD ADE”

The managers estimated both business situation and outlook for the next six months, a significantly worse than last. Especially in the export-dependent industry, it runs in the face of many international crises and the limp economy in the important market of Europe no longer around: Here the business climate is so bad as since July 2013 no more. “From export fewer pulses are expected,” said Ifo chief sense. Also in the wholesale, retail and service enterprises, the mood became turbid. Only the brewing industry was able to escape the downward trend.

In particular, the fear of a trade war with Russia charged to the exporters. German exports there had slumped by 15.5 per cent, or about three billion euros in the first half. Because of the Russian action in Ukraine, the mutual sanctions were tightened in July again. “The German economy remains vulnerable to external disturbances,” said Nordea economist Holger Sandte. “Especially on the industry weigh the ongoing weakness in the euro area and the uncertainty due to geopolitical tensions.” Alexander Krüger Bankhaus Lampe looks more than a little mood damper: “You can now say definitively: ‘Good Mood Goodbye’”

WHAT MAKES THE ECB?

Given the weakening economic powerhouse Germany is growing, the probability that the European Central Bank (ECB) nachlegt fight the recession in the euro-zone. She has worked with the purchase of securities of many billions to pump plans in the drawer euros into the economy and thus stimulate the economy. “The goal is a weaker euro,” said economist Sandte. That could help exporters because it makes their goods cheaper in other currency areas.